Equity markets begin 2016 on left foot, but currencies fairly stable


The first trading day of 2016 has not been a very pretty one for stock markets around the world, perhaps portending even more volatility ahead for traders in the new year.

Circuit breakers were in effect in several markets, with:

  • Shanghai Composite down 7%
  • Japan’s Nikkei 225 off 3%
  • Hang Seng Index down 3%
  • UK’s FTSE 100 down 2.4%
  • Gemany’s DAX off 4%

And while US markets have yet to open, US equity futures are indicating a 2% drop Monday morning, including a forecast 300 point drop for the Dow.

By contrast, most leading currency pairs are fairly quiet. The Euro is slightly stronger with the benchmark EURUSD up 0.3% to just above 1.09. There is some more volatility in Far East FX trading, with the Yen strengthening and the USDJPY down more than 1% to the 1.19 level, and the Aussie weakening more than 1% versus the USD to below 72 cents US.

It looks like the overall drop is being led by activity in the East, with week factory activity data for December in China leading the way.

Crude oil is heading the other way. Oil, which normally follows reports of slow economic activity down, is moving up with geopolitical tensions between two of the Middle East’s most powerful nations (and producers of large amounts of oil), Saudi Arabia and Iran, starting to heat up.

Looks like it will be a very interesting start to 2016 for traders.

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Equity markets begin 2016 on left foot, but currencies fairly stable

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